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Thursday, October 21, 2021

Crucial Requirements Every Entrepreneur Should Know While Starting Their Business

The process of setting up and starting a business is quite lengthy and can be overwhelming too.

After all, there’s a lot that you need to take care of including your business plan and market research as well as getting funding and hiring employees.

In such a situation, the legal hurdles of forming a business can seem challenging. To help you identify and complete them, we’ve put together this guide.

4 Steps to Follow to Start a Business in the USA

Here’s what you need to do to establish your business legally in the United States.

1. Get Your Business Name Registered

The first step in formally establishing your business is that of selecting a business name and registering it. This is important as it will give your business identity. 

For this, come up with a few relevant business names and choose the one that seems the right fit. Also, you should consider getting a trademark to ensure that no one else can use the name.

What’s more?

It’s also recommended that you get a domain name and social media accounts with the same name to set up your digital identity.

2. Choose a Business Structure

After selecting and registering your business name, you need to choose a legal entity for it. This step is one of the most critical ones as the entity type decides the various privileges that your firm will enjoy.

You can select one from these business structures:

  • Sole Proprietorship
  • Partnership
  • Limited Liability Company (LLC)
  • Corporation
  • S-Corporation
  • Non-Profit Organization 

Depending on the entity you choose, you’ll have to do the relevant state and federal filings. The different filing requirements are:

  • Sole Proprietorship: Doing Business As (DBA) or Fictitious Business Name (FBN)
  • Partnership: Doing Business As (DBA) or Fictitious Business Name (FBN)
  • Limited Liability Company (LLC): Articles of Organization
  • Corporation: Articles of Incorporation 
  • Non-Profit Organization: Depends on the state

Additionally, you need to get an employer identification number (EIN) or tax ID for your business. Without one, you can’t hire employees, open bank accounts, or even earn and report income.

3. Create Important Contracts & Agreements

It’s equally critical to create legal contracts and agreements when you’re starting a business. 

Why you might ask?

When disagreements arise at a later stage, you may lose out on valuable time and money in legal fees. However, if you’ve got an agreement for the same, it can save you from the hassle.

Here are the various agreements you should consider making:

  • Operating Agreement
  • Confidentiality Agreement
  • Employment Agreement
  • Independent Contractor Agreement
  • Corporate Bylaws

4. Open a Business Bank Account

Finally, it’s essential to separate your personal accounts from those of your business. For this, you should consider opening a business bank account.

This is where your EIN will come in handy. Along with it, you’ll also need to submit your state formation documents, ownership agreement, and other relevant documents.

Ready to start your business? Check out the infographic below designed by GovDocFiling to understand how to get started.

Starting Your Own Business: A Quick Guide to the Essential Requirements

Image Courtesy: GovDocFiling

 

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Brett Shapiro
Brett Shapiro is a co-owner of GovDocFiling. He had an entrepreneurial spirit since he was young. He started GovDocFiling, a simple resource center that takes care of the mundane, yet critical, formation documentation for any new business entity.

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